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Why Manchester City's China deal makes sense

Even if you are the world’s richest football team, $400m is not to be sniffed at, says Ed Attwood

By Ed Attwood

Tue 01 Dec 2015 04:00 PM

Even if you are the world’s richest football team, $400m is not to be sniffed at. For Sheikh Mansour bin Zayed Al Nahyan, the man who bought Manchester City Football Club back in 2008 for an estimated $320m, offloading a 17 percent stake in the holding group that owns the British team looks like a piece of decent business.

But it’s not about the money. The sum doesn’t even begin to cover the outlay in transfer fees, player salaries and infrastructure that Sheikh Mansour has funded in the seven years since the Abu Dhabi United Group (ADUG) took over. But it does show the huge value that has been built up in Manchester City and the other teams bought by City Football Group (CFG), the holding company that owns ADUG. All in all, CFG is now worth $3bn.

What does it mean for the team on the pitch? Not much. There has been little sign that the executive team at Manchester City has been prepared to rein in its big-spending ways, particularly now that the club has just turned its first profit under ADUG’s tenure. It doesn’t even look like any of the money will be funnelled towards new players; the statement from the club indicates that the capital from the stake sale will “fund its China growth, further CFG international business expansion opportunities and further develop CFG infrastructure assets”.

The cash will no doubt come in handy, but the real prize is China itself. It is by far the world’s fastest-growing consumer market and every football team wants its share. Neighbouring Manchester United reckons it has 100 million fans in the Asian nation, and the close season regularly features the world’s top clubs travelling to packed-out stadiums in the country.

But by tying up with two of China’s biggest firms, CFG has stolen a march on the competition. For state-backed China Media Capital Holdings, this is just the latest in a slew of entertainment and sports investment deals. In October, it shelled out $1.3bn for broadcast rights to Chinese Super League football. CITIC Capital is certainly no stranger to the Gulf – the Qatar Investment Authority (QIA) holds a stake in China’s largest brokerage, which has around $5bn in assets under management. Last year, the QIA and the Chinese investment house said they would jointly invest $10bn in Asia.

Fans of Manchester City may be concerned that this is the first sign that Sheikh Mansour is pulling out of his investment. They needn’t worry. What the deal also spells out, again, is that Manchester City’s development has not just been about success on the pitch, it’s about the long term as well. Right from the word go, the focus has also been on developing local infrastructure, from the remodelled Etihad Stadium to the Etihad Campus, a 200-acre piece of land in one of the most deprived parts of Manchester that opened last year. Even the likes of Paul Scholes has been heard saying that the Sky Blues now have the better academy.

Much was made of the fact that Chinese President Xi Jinping – a huge supporter of Manchester United - chose to visit the Etihad Stadium rather than Old Trafford during a recent trip to the UK. Now we know why.